AMAZON'S CALL CENTRE TO INDIA

Amazon's Call Centre to India

Amazon's Call Centre to India

Introduction

Amazon.com (Amazon) was founded in 1994 by Jeff Bezos, who is still the CEO and largest individual shareholder. Amazon.com started doing business in July 1995 by selling books on the internet. Amazon went public on May 15, 1997. For the year 2006, Amazon's revenue was $10.7 Billion. Amazon's product categories now include toys, consumer electronics, apparel, jewelry, grocery, tools, outdoor equipment, health and beauty, home and garden, and digital downloads in addition to books, music and other media products. Amazon now has a branded website in 7 countries, and delivers products all over the world.

Project Context

Amazon.com, its affiliates and partners receive several million customer contacts each year. Customers initiate these contacts via phone or e-mail and one of Amazon's customer service agents (CSAs) respond to them. Their global contact center network employs several thousand CSAs and consists of many nodes, including both Amazon and co-source partner sites. Amazon has over 50 major product categories, several key partners including Target stores, and several hundred thousand independent merchants making it the most complex e-commerce platform in the world. The metrics that Amazon uses to manage this part of its business include service level (i.e. the percent of inquiries answered in a specified amount of time), first contact resolution (FCR), average handle time, average speed to answer, average hold time, and cost per contact.

Direct integration to call centre service in India for immediate service solution, 5 year warranties no extended warranty available. No charge installation or training. Initial Cost: £ 2,990,000 Financing Terms: 5 years at an annual interest rate of 7 % expected annual net cash flows from purchase £ 625,000.

NPV and Payback Period

Payback Period

Discounted Factor

7%

Year

0

1

2

3

4

5

Net Cash flow

625,000

89,286

89,286

89,286

89,286

89,286

Cumulative Cash flow

625,000

714,286

803,572

892,858

982,144

1,071,430

Discounted Cash flow

625,000

83,445

77,986

72,884

68,116

63,660

NPV

$927,431

payback period

7.9997 or 8

Internal Rate of Return

Discount rate

7%

Year

0

1

2

3

4

5

Net Cash flow

-625,000

625,000

625,000

625,000

625,000

625,000

Discount Factor

1

1

1

1

1

Discounted Cash Flow

-625,000

584,112

545,899

510,186

476,810

445,616

Investment Measures

Project Outcomes

After the above working over the two options that Amazon.com has, it can be said that second case or the option is more suitable as the net present value is in positive, moreover, the internal rate of return of the company is also good however, in the second case, the internal rate of return is lower than the first case. Furthermore, NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account (Brigham, and Ehrhardt, 2010, 45). If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative. The NPV calculation is very sensitive to the discount rate: a small change in the discount rates causes a large change in the NPV. As the estimate of the appropriate discount rate is uncertain, this makes NPV numbers very uncertain (Vallabhaneni, 2009, 32). In addition to this, it can be seen that in the first case, the can net present value of the company is in negative which means that the situation is not favorable for the company in the future...